Correlation Between Direxion Daily and Select International
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Select International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Direxion Daily and Select International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Mid and Select International Equity, you can compare the effects of market volatilities on Direxion Daily and Select International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Direxion Daily with a short position of Select International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Select International.
Diversification Opportunities for Direxion Daily and Select International
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Select is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Select International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select International and Direxion Daily is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Direxion Daily Mid are associated (or correlated) with Select International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select International has no effect on the direction of Direxion Daily i.e., Direxion Daily and Select International go up and down completely randomly.
Pair Corralation between Direxion Daily and Select International
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 4.02 times more return on investment than Select International. However, Direxion Daily is 4.02 times more volatile than Select International Equity. It trades about 0.07 of its potential returns per unit of risk. Select International Equity is currently generating about 0.07 per unit of risk. If you would invest 3,736 in Direxion Daily Mid on September 12, 2024 and sell it today you would earn a total of 2,532 from holding Direxion Daily Mid or generate 67.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. Select International Equity
Performance |
| Timeline |
| Direxion Daily Mid |
| Select International |
Direxion Daily and Select International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Select International
The main advantage of trading using opposite Direxion Daily and Select International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Select International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Select International will offset losses from the drop in Select International's long position.| Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
| Select International vs. Pender Real Estate | Select International vs. Virtus Real Estate | Select International vs. Franklin Real Estate | Select International vs. Fidelity Real Estate |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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